When Apple announced that it cut
the price of the iPhone by $200 to $399, there were many irate customers
yelling at their computer screens. The only people that seemed to be happy
regarding the news were the people who wanted an iPhone, but were turned off by
the $600 price tag and those that wanted to rub salt in the wounds of the early
adopters.

"We have decided to offer every iPhone customer who
purchased an iPhone from either Apple or AT&T, and who is not receiving a
rebate or any other consideration, a $100 store credit towards the purchase of
any product at an Apple Retail Store or the Apple Online Store," said Jobs
on September 6.

Jobs said that more details would be revealed the following
week and he stuck to his word.

iPhone customers will first be required to go to Apple's website and enter
in their iPhone serial number and phone number. After that time, an SMS text
message will be sent to the phone with an access code to redeem the $100
credit. The access code can then be used in combination with your phone number
to generate an electronic store credit of $100 to use towards any Apple Store
purchase.

Customers must request the credit before November 30, 2007
or forfeit their rights to the $100.

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Ah.... But a $100 cash refund would be very bad for Apple's bottom line... Reason being they will (obviously) actually be losing $100 per phone sold. If they offer you $100 store credit, chances are you're going to buy something that retails for $100 or so, but in reality really doesn't cost apple much of anything at all! Thanks the real reason for store credit and why it's offered so often to angry customers.... It's effectivly a placebo, the customer feels justified, and the retailer really doesn't get all that hurt.

Learned all about that durring my just after college time spent at Radio Shack :)

Indeed, I did some time with the Best Buy Geek Squad a few years back and we did the same thing. With the insane markups on most accessories (The likely item to be purchased with instore credit) it wasnt an issue. Things like the $30 USB cable really only cost us about 1.35, so the customer burned $30 store credit, we only took the 1.35 hit which was easily made up by selling the same accessory that same day to a regular customer. Ah the joys of retail marketing, your still getting screwed even if you don't know it.

FYI... I don't shop at best buy out of principle, the shit they do is just over the top. I know it, I worked there, I saw us do it lol.

You also have to remember a markup is not only on accessories but major products as well (ie the iphone). I am sure they made a large margin on that product alone and the $100 rebate they are offering is merely a portion of the markup. Also think about the process needed for people to get the $100 rebate.1. Go to apple.com which gives the site more hits which = more revenue2. Receive sms messege, do this, do that, bla bla bla

How many steps does it take? Too many for alot of people and they will end up being either too lazy or get confused about the whole thing.What about the parent who just bought the product for their child and never hears about the rebate, or the business man who does not care about the $100.Apple all-in-all will not even be giving out money to the ALL 500,000+ early adopters, maybe half will actually take advantage of it. And they might just be getting products Apple has overstocked and are just trying to get rid of ala PS3 style

I can't speak for Best Buy, but I can tell you that it was quite frequent that we made no profit (or more often than you think lost money) selling TVs, computers, gaming systems etc.... The only reason why Radio Shack sold that kind of stuff was to get you buying PBA (Parts, Batteries and Accessories). Which would be the *real* reason why they ask you if you need batteries/hookup cables when buying a shiny new HD TV with HD-DVD/Blueray player... Because if you don't buy any they're going to lose out on the sale!

When I worked at RS in the early 1990's, it didn't work this way. They earned margin pretty much across all products except for door-busters and clearance items. Sure, "PBA" had higher margins, but they were also making decent margins on big-ticket items.

Hmmm, things must really have changed by the time I was there in '02... For instance I can tell you right now our stores margines were negitive for laptop computers (i.e. we lost selling laptops), TV's weren't great either, DVD players were nothing to jump up and down about (and your comission on these product reflected this). If you wanted to make money you pushed PBA, cell phones and satallite TV.